Surprising this is out there but probably part of the analysis on the financial crisis in 2008. Crazy how pay almost 20 years later is slightly less on an unadjusted basis than in this banking golden age. Cost of living is now about 62% more expensive.
https://web.stanford.edu/~jbulow/lehmandocs/docs/LARRY%20WIESENECK/LW%2000893-00927.pdf
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Woah $5M single year guarantee in 2007 is crazy. Probably means there are similar size guarantees floating around today
My MD is a midbucket, which explains why he is mid
Comp for the very top tier of MDs has gone through the roof. Lehman’s top guys like Paul Parker and Joe Gallo were making 11mm. Comparable bankers at EVR and CVP are making 25mm+ and that’s leaving aside people lole Tokat making 100mm+
Comp has shrunk for tier 2 MDs and mid level bankers and that’s probably right. The rainmakers deserve to make real money, the processors not so much.
There’s MDs making $25m per year?
Plenty but other than GS they don’t sit at the bulge bracket
The guy at PWP who brought in shockwave cleared ~$30m on that alone
How much of this greater wealth inequality within banking, is reflective of growing wealth inequality in society as a whole?
0% roughly
It’s a nice analogy but I don’t think correlation equals causation. I just think banks have reevaluated how and where they pay people and the ability to generate fees outside of a balance sheet is what certain firms pay through the odds for.
Stay out of IB
I don't think it's useful to compare commissions in a single tiny industry (large cap investment banking) to the complex mix of a million economic/technological/cultural variables driving global wealth inequality
I also don't think it's smart to confuse wealth and income inequality
If you are upset about being on the wrong end of the income distribution, consider the following possibility: the market just doesn't put a high price on extremely mushy and sloppy thinking
Can you elaborate / list some more names you think are prominent today? Really appreciate comments like this
What is funny about this chart is I know a lot of the associates and VPs here working with them on deals and my rating of them is not Lehman’s. A lot of people I thought were great are in the average buckets and a lot of people I thought were average are in the top bucket lol..
Being great at the junior level doesn’t necessary translate into being a great D/MD.
How so?
This is when we were all associates / VPs working on deals together
VPs get paid more then than they do now - crazy
This industry is going to shit
It is not just VPs. As a German, these numbers are mind-boggling. There is a Frankfurt Assoc on there who cleared 275k in 2006 (!!!!!!!). You know how dirt-cheap 2006 was? I wrote it in another tread, you could eat a Doner Kebap for 3 EUR (now 10+), rent the nicest best of best flats in town for likely 1.5k (and by that I really mean top of the market housing in the nicest areas) and they clip much MORE than most assocs do today?
This is what I refer to when I say finance is not really well compensated anymore if you adjust for the hours of work put in. I'm more than happy to work the hours takes for that banking comp it used to be (which I would assume would roughly be 350-370 today? if I translate it in real terms) and live like a young-king during my limited free-time.
But to have LESS absolute pay with drastically INCREASED COL is insane!!
No wonder these guys think working you like a dog is part of the game. I’m on absolute joke of a comp compared to my 2007 peers, what the actual f
Wasn’t there a comp cap introduced post financial which meant a large chunk pivoted towards stock and deferred.
MDs in DCM cleaning USD 3mm a year in 2007 lmao. Insane.
Adjusted for inflation, comp is down an incredible amount. A dollar earned in 2007 is worth almost $1.60 today…and their comp is higher on an absolute basis.
Wow, Risk Solutions Group was crushing it - group head was clipping $7-10m
Risk solutions was the derivatives group right before the gfc
Running to get a plane, will share some thoughts here later
thx
Md in my group that was extremely mid and never brought in deals got over 700k as mid VP in 2006 lmao.....I hate this industry so much, totally a dying job
To answer the questions about who the hitters are - outside of the very public names l, the Tokat’s, the Nataraj’s, the Grimes, etc (who are well above 25mm), I’d rather not names but I’d say the people earning that much tend to work at either the independent advisory firms or the larger MMs and are the most senior bankers in the healthcare or TMT spaces (though everyone now and then you will see an energy, FIG or industrials banker) or are the senior most partners at GS. It won’t be names you know but rather people on revenue deals pulling 75mm+ in fees annually. In general the trend is the comp for the people who can pull in fees at the more entrepreneurial platforms is up and the comp for the BB and product bankers is down as it is for mid level people. Analysts are probably up 50-60% in nominal terms. Banks have reevaluated where the value is, fair or unfair.
You also have to think about how insanely profitable Lehman was and how insanely profitable 2007 was. Lehman made $4.2bn as a pure play investment bank and 26% ROE. We all now know it was built on unpalatable risk but back then people didn’t differentiate between money made on advice and money made on risk. Now they do.
agree, i think the regulatory limits on how much leverage banks can use lowered ROE and trickled down to lower pay for juniors. Monkey Business book mentioned how first year MBA Aso made ~200k all in the mid-90s.
The flip side is that so much more investment banking is done by the advisory firms who have super high ROEs. The reality is that’s where the money is today.
We better get the full reveal when you retire. One of the more insightful posters on this site.
Needs to be in the WSO Monkey HOF
As a college student looking to enter the industry, in order to become one of these rainmaker-type MDs, would you say it’s better to start off at a BB or an EB/independent advisory group?
My (rudimentary) understanding is that these guys pulling insane figures (Quattrone, Boutros, etc) first build up their book at a BB and then leverage their connections and expertise to set up shop somewhere with better economics. For someone with no connections, is the only way to climb up the ladder at a big platform and then jump ship later on?
That’s like a kid playing tee ball when he’s 6 asking whether he is more likely to be an MLB all star if he goes to a public or private high school
In most deal industries, getting a big brand first for a while and then moving helps.
The duration depends on how long you need to get actual dealmaking explosure. At a VC, the juniors do a good chunk of sourcing. In PE/IBD, only the senior people source deals. This makes it hard for a junior to command better economics, as you're not bringing in more money.
You can demand much better economics if it's clearly you bringing in the money. This is one reason why you see some people do incredibly well in VC at small funds, as they hit 1-2 great deals and fly up the ranks to GP. This of course depends heavily on actually hitting winners.
Do you see comp ever increasing nominally for those at the junior and mid levels? This pay looks so much better than today's numbers.
What does comp look like for the MDs under you? Ik you a group head but any of the non GH seniors pulling down more than 3-4 per year? And are you one of the highest paid at your firm?
Ya'll really thought you weren't affect by boomer greed huh
That’s why most of the daf about juniors or their jobs. Most sitting on $10mm in wealth
Recognized about 5 names that are now MDs at UBS.
All mid bucket and below. Unsurprising. Checks out - Barclays clearly isnt sending their best
Adverse selection at its finest
Brought me back to my econ days. Cracked me up thinking that the asymmetrical information those MDs aren't sharing are that they actually suck that their jobs.
You guys should read the books about banking in the 80s. $100s of thousands for VPs in 1980s dollars!
I was a junior back then. 2005-2007 was truly an amazing time
How great were the parties?
Guess no woke clowns and feminists to ruin them.
Phenomenal, especially the after-parties.
We didn’t really have expense account guidelines, and there wasn’t real public scrutiny on the banks yet so we didn’t give a shit about optics.
Bonus day was the real Christmas.
Did we work are ass off? Yes, but we were paid extremely well with a lower cost of living than today.
Lol, can't say I'm surprised.
My uncle started in equity sales in the late 80s and bought several buildings with his bonuses. He funded his own real estate development firm using nothing but his savings... meanwhile I barely had enough for the downpayment on my first flat with my first bonus 25 years later.
It was still a much newer & riskier industry.
lol, its been around for hundreds of years
banking goes through multidecades super cycles, it was dead from 1929 to the mid 1950, was great from the mid 1950s to early 1970s, was dead until 1984, then had a 23 year boom through 2007, expect a revival in c2030
Nahh it’s saturated, and the power of information has been commoditized
You know what I meant. The role in that form with that level of risk & product offering was relatively new.
Analogous wages:
-Petroleum engineer
-Software engineering
Man this is kind nuts tbh. When I compare my Associate and VP comp (2019+) to the comps in this file, it is pretty similar. And I was always near top of the street based on data shared here on the Bonus threads . Only small difference is that it’s 15 years later.
These guys were making bank! It’s funny I’ve got a few VPs and directors from this file and my MDs now. I think adjusted for inflation they are making less now as heads of teams
On a side note - I hate clowns like Charlie Kirk and Tucker Carlson to the core. But they’re spot on on the assessment that boomers are the greediest, most selfish generation in history who are always looking to pull the rug from under the generations after them. IB compensation trends attest to that.
I could have been a mid bucket associate in the mid 2000s and still live in a dreamy Brooklyn Heights 1 bedroom apartment and save a fuckton of money.
Truly ain't fair.
And then they wonder why juniors don't grind as hard. Fuck me if my lifetime NPV was 5x-10x what it is now of course I would be grinding like a dog.
Also the culture being much better without the constant DEI witch hunting. Granted some of it was over the top but right now it has become such a burden.
I saw this long ago but this is still shocking. Even more shocking is the reply that says 75m fee MD makes 25m a year.
I am in HK and my MD was the sole MD in a sector group with 25y IB experience. He cleared 50m fee last year and was paid 1m only. 10-15m fees in ECM/M&A, rest in DCM or LevFin but yea, that is still WAY BELOW the numbers cited above.
Maybe because it's in HK? This seems very low if true. Any thoughts from our MD poster above?
Is that all his attributable fees before splitting with M&A/ECM/DCM? Or did he just say the nominal figure to sound more impressive. Just a gut check - if he is really that much of a baller just start your own shop or move to a leaner platform.
Exactly. 25 years of experience and cleared a 50m fee but 1) what's that split and 2) how much hustling did he actually do to land that deal or did he just get grandfathered into a relationship given the name of the bank?
MD in HK is quite standard at 1-1.5m USD all in for senior MD with >5-10y post MD experience.
In fact I think even head of APAC IBD may not make 5m USD in many shops.
It is before split with product team but he is the origination guy. Left the bank last year and revenue immediately -70% yoy as he holds the relationship
You said it all when you said DCM / Lev Fin. To make that kind of money you need to be doing that much in M&A fees outside the bulge
It all depends on the MD you work under.
It's a harsh reality check to earn less today while paying 60% more to live, demonstrating how stagnant real wages have been.
Too many people flodding the industry like they discovered gold mine. Too many bankers now. For each deal, dozens of banks are competing for it.
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